Wednesday, December 9, 2020

The Slow Death of Chicago's Edgewater Hospital and the Scandals that Caused its Closing.

Edgewater Hospital founder, Doctor Maurice Mazel, was a resident of the Edgewater Beach Apartments, in 1929 when the hospital was started. The funds came from Edgewater developer John Lewis Cochran’s Real Estate firm at the outset of the Great Depression. 
Doctor Maurice Mazel




Dr. Mazel personally oversaw hospital operations until he died in 1980. During his tenure, notable births included former US Secretary of State Hillary Rodham Clinton and serial killer, John Wayne Gacy. Mazel's wife, Circus Hall of Fame performer Harriet Mazel-Szanto, functioned as chairman and CEO from 1980 to 1984. She later shed the CEO title but remained on as chairman until 1988. After her passing, the hospital sought new ownership under the Mazel family.
Edgewater Hospital as it appeared in the 50-60s.


Medical staff is ethically obligated to provide the best possible quality of care for patients, no matter the affliction. For some executives and doctors at Chicago’s Edgewater Medical Center, personal profits came before those ethical standards. The unnecessary suffering and premature deaths they caused resulted in the shuttering of a historic Chicago neighborhood hospital. It was shut down abruptly after years of controversy involving Medicare fraud, mismanagement, and bankruptcy.
Edgewater Hospital's vintage patient rooms.
TVs were added to patient rooms in the 1950s.


Businessman Peter Rogan acquired Edgewater Medical Center in 1989 for $1 million cash and assumed its $10 million in liabilities through the Edgewater Operating Company (EOC) he created. In 1994 Rogan sold EOC and the real estate to the Edgewater Property Company (EPC), which he also controlled. In the deal, Edgewater Medical Center paid an exorbitant monthly rent of $79,500 to EPC. At the helm of both entities, Rogan funneled profits directly into his own pockets.

Corruption rooted itself deep into Edgewater’s staff. Rogan orchestrated a complex system of kickbacks for doctors and staff complicit with committing fraud against Medicare, Medicaid, and private insurance companies. Vice president Roger Ehmen and medical director Dr. Ravi Barnabas were able to turn the nearly bankrupt hospital into a lucrative profit center. The pair tapped Dr. Sheshiqiri Rao Vavilikolanu and Dr. Kumar Kaliana to recruit potential patients. For years the doctors sent hospital employees into the Chicago community to find potential patients. It did not matter if they did not have heart conditions, were drug addicts, unable to speak English, or had no health insurance coverage. Recruiters instructed the potential patients how to feign symptoms to mandate services rendered by Edgewater Medical Center. In return, the patients were offered money, food, cigarettes, and other amenities for their cooperation.
Edgewater Hospital's Hollywood Building rooftop solarium 1949.
Rooftop deck accessible through the solarium on the Hollywood Building.





Another complicit Edgewater physician participated in the massive fraud scheme. Dr. Andrew Cubbria tapped into the recruited patient pool for unnecessary angiogram and angioplasty operations. Albert Okaro, 42, underwent an invasive and unnecessary cardiac surgery that ultimately killed him. The patient’s death was regarded as collateral damage for Dr. Cubria. Tax-payer funded healthcare programs and private insurers reimbursed the hospital for more than 750 invasive, and expensive, cardiac surgeries performed by Dr. Cubria alone.

One Edgewater physician, Dr. Krishnaswami Sriram, a cardiologist, billed the government for seemingly impossible human feats. According to Dr. Sriram’s billing records on November 12, 1997, he saw 187 patients… all of whom coincidently had congestive heart failure. In January 1999 a severe snowstorm brought Chicago to a standstill. Despite the hazardous weather conditions, Dr. Sriram was apparently able to visit 31 elderly patients at their homes and 18 more in medical facilities. Thirty-two of Dr. Sriram’s patients also managed to incur new medical costs long after their deaths. On paper, it appeared as though Dr. Sriram was indefatigable. His records indicate that he met with patients every single day in 1997 and 1998 while missing only two days of work in 1999.

Dr. Sriram’s apparent superhuman ability to visit patients did not go by unnoticed. Some of the elderly patients he targeted began to grow suspicious after noticing over-inflated billings on Explanation of Benefits forms. At least 15 patients contacted the Wisconsin Physicians Service, which handles claims in the Illinois area. Wisconsin Physicians Service alerted the FBI and they immediately began an investigation.

Things began to unravel in 1999 when the hospital paid out over $1 million to stave off an impending federal lawsuit over Medicare billing irregularities. The ambitious Dr. Sriram was taken into custody in 2000. Feds exposed the rest of the fraud operation in 2001.
Edgewater Hospital flooded nurses’ station.



The upheaval brought on by the charges cut the hospital’s day-to-day operations off at the knees. In November 2001 the US government, which accounted for 90% of Edgewater Medical Center's income, ceased Medicare payments indefinitely. Unable to find a suitable financier the hospital shut down in December 2001. The remaining 450 staff were suddenly out of a job or had to transfer to other area healthcare facilities. In addition to the displaced staff, 52 patients were transferred to other facilities for ongoing care.
Peter Rogan, former Chief Executive Officer of Edgewater Medical Center in Chicago.





In a 2006 trial, U.S. District Judge John Darrah in Chicago found Peter Rogan had lied on the stand and destroyed documents to obstruct justice and entered a $64.2 million judgment against him. There was also a whopping $188 million more in civil judgments against him. Rogan fled to Canada in the fall of 2006 when FBI agents searched his abandoned business offices in northwest Indiana. Among the discarded furniture and empty folders, agents found something astonishing: An invoice to Rogan from a company he hired to destroy 47 boxes of financial records. In addition to the federal charges, French Bank "Dexia Credit Local" was working with the Justice Department to recover assets scattered throughout various bank accounts and front companies in the Caribbean. One of the trusts found was set up in the Bahamas and was entitled the "Peter Rogan Irrevocable Trust." Rogan insisted that he maintained no control whatsoever over the assets and could not access it. In October of 2015, Rogan, 69, was sentenced to 21 months in prison for lying in his 2006 sworn affidavit that he had no control over a multimillion-dollar trust account in the Bahamas when he was actually using the money to support his lavish lifestyle. Rogan had been renting a $5,000-a-month penthouse condominium in Vancouver. He had engaged the government and others he owed money in a yearslong, expensive game of "catch me if you can," shredding a total of 67 boxes of documents and lying about his assets as authorities tried to trace accounts all over the world. The sentencing marked the end of nearly seven years of criminal proceedings against Rogan.

Senior vice president Roger Ehmen and Dr. Ravi T. Barnabas were convicted for their roles in the fraud operation. Ehmen received 6½ years of prison time and was ordered to pay $5 million in restitution. Ehmen was quoted at sentencing saying; ”Words alone cannot describe the deep sorrow and regret I have. I will have to live with this guilt for the rest of my life.” Medical director Dr. Barnabas was sentenced to 4 years and 4 months prison time and ordered to pay $1.1 million in restitution. Dr. Barnabas’s physician license is still active in Illinois and expires on July 31, 2023.

Dr. Sheshiqiri Rao Vavilikolanu confessed that he unnecessarily admitted over 900 patients. He was sentenced to 3 years and 11 months of prison time and ordered to repay $6 million to Medicare and Medicaid. Dr. Vavilikolanu’s license not active anywhere nationwide. Dr. Kumar M. Kaliana admitted to mail and healthcare fraud. He received a 1 year and 4 months sentence and forced to return $156,000, along with $1.1 million in restitution. Dr. Kaliana’s physician license has not been renewed since September 30, 2020.

The courts came down most heavily upon Dr. Andrew Cubria. In addition to Albert Okaro’s untimely death in 2000, the feds discovered that at least one more unnecessary cardiac operation resulted in the death of another patient in 1999. Dr. Cubria was sentenced to 12½ years in prison for his wrongdoing. He was also ordered to return $2 million of his profits and pay $14.4 million in restitution. His physician license was suspended thereafter.

The man whose superhuman feats caught the eyes of the FBI was also brought to justice. A teary-eyed Dr. Sriram cried as he apologized for what he called "my foolishness." He pleads guilty to mail fraud, healthcare, and tax fraud. He faces up to 18 years in prison, but he has been appealing that ruling. As part of his plea, the doctor has agreed not to practice medicine. 

Sriram had faced as much as 18 years in prison if U.S. District Judge John Darrah had found that the losses from the fraud totaled the government's original claim of $15 million. A federal judge spared the doctor prison and sentenced him Thursday, April 28 2005 to 5 years of probation for Medicare fraud. Federal prosecutors had originally contended that the fraud scheme by Dr. Krishnaswami Sriram exceeded $15 million in losses, but Judge Darrah concluded the loss came to just $1,258. Dr. Sriram's physician license is active but on probation until July 31, 2023.

After a decade of abandonment, Edgewater residents are aiming to rid themselves of the abandoned hospital. According to The New York Times, the property is in the hands of the Edgewater Medical Center Bankruptcy Estate, which is comprised of 250 creditors who are still owed more than $110 million. Of the creditors, French Bank Dexia is owed over $55 million. Unable to recoup their costs creditors would like to see the hospital razed in favor of business development. Edgewater community members would rather have the real estate transformed into parkland. According to an official city-authorized assessment the hospital is valued at $5.9 million. The cost to demolish the hospital is estimated to be $6.5 million alone.
One of the intensive care units in the abandoned hospital.



What will happen to that hollowed-out shell that was once Edgewater Medical Center? What sets this building apart from other failed urbex locations is that it was created by criminal acts over an extended period of time. Even though the hospital was dated, they were still operating in a capacity that for the most part benefitted patients. By the time the FBI discovered the corruption it had already metastasized and killed the Edgewater Medical Center.

Like most hospitals with chronologically staggered additions, it is a winding labyrinth. Some of the floors look practically identical and it is easy to lose one's bearings. Yet each section of the hospital was still unique in its own way. 

Biohazard containers, alcohol swabs, diabetic supplies, and other pharmaceutical supplies were littered throughout some of the rooms. Medical records, tissue samples, autopsy records, and medical images were found in one of the labs. 
Patient records stacked on the floor almost reach the ceiling.
Tissue sample slides.
An x-ray photo of the human heart with arteries highlighted.



Heavy equipment such as a hyperbaric chamber and x-ray machines were tucked away behind closed doors. Above the Kadin Memorial Nurses’ Residence was a filthy empty pool under a skylight. Vintage furniture from the 1970s occupied some of the rooms even though eviction notices from 2002 were found on the floor.
Abandoned Hyperbaric Chamber.


A massive x-ray machine still residing within the hospital.

One of the laboratories with numerous patient records and equipment. Note the orange, avocado green, and harvest gold (not seen in this picture) colors popular in the 1970s.
Vintage furniture still occupies some of the nurses’ apartments.



The administration building was, perhaps poetically, completely devoid of mementos of life. It is quite unsettling to see a once intentionally sterile hospital environment ravaged by the uninhibited destructive elements of nature.
Edgewater Hospital view from Ashland and Hollywood, 2014.



Edgewater Medical Center Demolition.
Edgewater Medical Center Campus.




The story of the Edgewater Medical Center foreshadowed many of the problems that plague the American healthcare industry today. Profit-focused healthcare endangered the lives of those who could not or were unable to protect themselves. Patients at Edgewater Medical Center were exploited by the greed of administrators and doctors to the tune of millions of dollars. The system failed thus taking vital healthcare services away from one Chicago community.
Rendering of the Anderson Point Apartments.




Compiled by Neil Gale, Ph.D.

5 comments:

  1. Thank you for this very informative article. I knew Edgewater had a dark history, but had no idea it's management was so corrupt. Shame on these people. Was shocked to read that a couple of the doctors still have their licenses.

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  2. I often drove by there on Ashland and wondered what was going on with this building. I moved to West Ridge in the 1970's and the hospital then looked like it was on it's last legs. I had no idea they were still open in the 1990's. We used Ravenswood Hospital, until that closed also.

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  3. I grew up down the street from Edgewater Hospital in the 50's and 60's. Everyone in the neighborhood used their ER facilities at one time or another. As kids we used to run down the street every time an ambulance pulled up to the ER entrance. It is a shame that the hospital's history has to be tainted with dishonesty and corruption.

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  4. Well done- informative- tragic. I've leaved in Chicago then Evanston my entire life. I've followed the Politics. I find something especially appalling when I read about this kind of Medical Fraud- especially involving so many individuals. Fines are one thing- I suspect they usually go 95% Un-paid. Jail Time- absolutely- and it sounds like these culprits " got off easy". It's an ugly sad story- thanks for taking time to research and write it!

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  5. I worked there from 1982 to 1992. It was a very nice place to work for. When I first started lunch was paid for. Too bad greed won. :(

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